cg307.htm

0000897069-13-000427.txt : 20131223 0000897069-13-000427.hdr.sgml : 20131223 20131223171204 ACCESSION NUMBER: 0000897069-13-000427 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20131223 DATE AS OF CHANGE: 20131223 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRO DEX INC CENTRAL INDEX KEY: 0000788920 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 841261240 STATE OF INCORPORATION: CO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-37216 FILM NUMBER: 131295738 BUSINESS ADDRESS: STREET 1: 2361 MCGAW AVENUE CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 949-769-3200 MAIL ADDRESS: STREET 1: 2361 MCGAW AVENUE CITY: IRVINE STATE: CA ZIP: 92614 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Swenson Nicholas John CENTRAL INDEX KEY: 0001478067 FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 3033 EXCELSIOR BOULEVARD STREET 2: SUITE 560 CITY: MINNEAPOLIS STATE: MN ZIP: 55416 SC 13D/A 1 cg307.htm cg307.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D/A

Under the Securities Exchange Act of 1934

(Amendment No. 13)*

PRO-DEX, INC.

(Name of Issuer)

Common Stock, no par value

(Title of Class of Securities)

74265M205

(CUSIP Number)

Nicholas J. Swenson

3033 Excelsior Blvd., Suite 560

Minneapolis, MN 55416

Telephone: (612) 353-6380

(Name, Address and Telephone Number of Persons Authorized to Receive Notices and Communications)

December 17, 2013

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

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CUSIP No. 74265M205

1	NAME OF REPORTING PERSONS AO Partners I, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)			(a) x (b) ¨
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS) WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)			¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 720,753
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 720,753
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 720,753
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)			x
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 21.4%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN

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CUSIP No. 74265M205

1	NAME OF REPORTING PERSONS AO Partners, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)			(a) x (b) ¨
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS) WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)			¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 720,753
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 720,753
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 720,753
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)			x
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 21.4%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN

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CUSIP No. 74265M205

1	NAME OF REPORTING PERSONS Nicholas J. Swenson
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)			(a) x (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS (SEE INSTRUCTIONS) PF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)			¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 720,753
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 720,753
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 720,753
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS)			¨
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 21.4%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN

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CUSIP No. 74265M205

Item 1.

Security and Issuer.

This Amended Schedule 13D relates to shares of the Common Stock, no par value, of Pro-Dex, Inc., a Colorado corporation (the “Issuer” or the “Company”). The address of the principal executive offices of the Issuer is 2361 McGaw Avenue, Irvine, California 92614.

Item 2.

Identity and Background.

This Amended Schedule 13D is being filed jointly by the parties identified below (the “AO Partners Group”).

●	AO Partners I, L.P., a Delaware limited partnership (“AO Partners Fund”).

●	AO Partners, LLC, a Delaware limited liability company and General Partner of AO Partners Fund (“AO Partners”).

●	Nicholas J. Swenson as the Managing Member of AO Partners and as an individual.

Each of the foregoing is referred to as a “Reporting Person” and, collectively, as the “Reporting Persons.” Each of the Reporting Persons is a party to that certain Joint Filing Agreement attached as Exhibit 1 to Amendment No. 9 to the Schedule 13D, filed on April 18, 2013.

(a) – (c) This statement is filed by Mr. Swenson, with respect to the shares of Common Stock beneficially owned by him, as follows:

(1) shares of Common Stock held in the name of AO Partners Fund in Mr. Swenson’s capacity as Managing Member of AO Partners.

(2) shares of Common Stock held by Mr. Swenson as an individual.

The principal business address of each of AO Partners Fund, AO Partners, and Mr. Swenson is 3033 Excelsior Blvd., Suite 560, Minneapolis, MN 55416. Each of AO Partners Fund and AO Partners are engaged in various interests, including investments. The principal employment of Mr. Swenson is (1) private investor, (2) serving as the sole Managing Member of AO Partners and (3) serving as sole Managing Member and President of Groveland Capital, LLC, a Delaware limited liability company and investment manager.

(d) None of the Reporting Persons described herein has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) None of the Reporting Persons described herein has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws.

(f) Mr. Swenson is a citizen of the United States of America.

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CUSIP No. 74265M205

Item 3.

Source and Amount of Funds or Other Consideration.

The Common Stock of the AO Partners Group was acquired in open market purchases with working capital of AO Partners Fund and the personal investment capital of Mr. Swenson. The amount of funds expended to acquire these shares is $1,437,817.

Item 4.

Purpose of Transaction.

The AO Partners Group acquired shares of Common Stock because it believes that the Common Stock is undervalued. The AO Partners Group’s intent is to influence the policies of the Issuer and assert shareholder rights, with a goal of maximizing the value of the Common Stock.

On June 27, 2012, Mr. Swenson submitted notice to the Issuer of his intent to nominate Mr. Swenson, Mr. Cabillot and Mr. Farrell as nominees for election as directors at the Company’s 2012 Annual Shareholder Meeting. A copy of the nomination letter is attached as Exhibit 3 to Amendment No. 6 to the Schedule 13D, filed on June 27, 2012.

Mr. Swenson requested that the Board of Directors of the Issuer appoint him as a director. The Issuer has denied Mr. Swenson’s request to be appointed as a director. On June 1, 2012, Mr. Swenson responded to the Issuer requesting clarification for the Board’s decision not to appoint him as a director. A copy of the letter is attached as Exhibit 2 to Amendment No. 5 to the Schedule 13D, filed on June 4, 2012. The Issuer responded in a letter dated June 15, 2012, a copy of which is attached as Exhibit 4 to Amendment No. 6 to the Schedule 13D, filed on June 27, 2012.

Mr. Swenson, Mr. Cabillot and Mr. Farrell were elected as directors at the Company’s 2012 Annual Meeting of Shareholders held on January 17, 2013.

On December 17, 2013, the Company issued a press release announcing its plans to complete a rights offering to existing holders of its Common Stock. Upon completion of the rights offering, the Company expects to receive gross proceeds of approximately $3,000,000 before expenses, subject to reduction by the Company in its sole discretion as the Company may deem advisable to preserve its use of certain tax attributes. In connection with the rights offering, the Company entered into a Standby Purchase Agreement with AO Partners, LLC and Farnam Street Capital, Inc. (collectively, the “Standby Purchasers”), pursuant to which the Standby Purchasers have agreed to purchase, at the prevailing subscription price, any and all shares of the Company’s Common Stock, up to a maximum amount of $3 million, not subscribed for by the Company’s shareholders pursuant to the exercise of their subscription privileges in connection with the rights offering. Shares of Common Stock purchasable under the Standby Purchase Agreement are allocated 50% to AO Partners, LLC and 50% to Farnam Street Capital, Inc. The Standby Purchase Agreement contains customary provisions for such agreements, including conditions to closing, termination rights, representations and warranties, and covenants of the parties. This summary of the Standby Purchase Agreement is qualified by reference to the full text of the Standby Purchase Agreement, a copy of which is attached as Exhibit 5 to this amendment No. 13 to the Schedule 13D.

The Reporting Persons may make further purchases of shares of Common Stock. The Reporting Persons may dispose of any or all the shares of Common Stock held by them.

To the extent the actions described herein may be deemed to constitute a “control purpose” with respect to the Securities Exchange Act of 1934, as amended, and the regulations thereunder, the Reporting Persons have such a purpose. Except as noted in this Amended Schedule 13D, none of the Reporting Persons has any plans or proposals, which relate to, or would result in, any of the matters referred to in paragraphs (b) through (j), inclusive of Item (4) of Schedule 13D. Such persons may, at any time and from time to time, review or reconsider their positions and formulate plans or proposals with respect thereto.

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CUSIP No. 74265M205

Item 5.

Interests in Securities of the Issuer.

(a) The following list sets forth the aggregate number and percentage (based on 3,343,988 shares of Common Stock outstanding as reported in the Issuer’s Form 10-Q, for the period ended October 31, 2013) of outstanding shares of Common Stock owned beneficially by each Reporting Person named in Item 2:

Name	Shares of Common Stock Beneficially Owned	Percentage of Shares of Common Stock Beneficially Owned
AO Partners Fund	720,753	21.4%
AO Partners (1)	720,753	21.4%
Nicholas J. Swenson (2)	720,753	21.4%

(1)

AO Partners is the General Partner of AO Partners Fund. Because Mr. Swenson is the Managing Member of AO Partners, he has the power to direct the affairs of AO Partners. Therefore, AO Partners may be deemed to share with Mr. Swenson voting and dispositive power with regard to the 720,753 shares of Common Stock held by AO Partners Fund.

(2)

Because Mr. Swenson is the Managing Member of AO Partners, the General Partner of AO Partners Fund, he has the power to direct the affairs of AO Partners Fund, including the voting and disposition of shares of Common Stock held in the name of AO Partners Fund. Therefore, Mr. Swenson is deemed to share voting and dispositive power with AO Partners Fund with regard to the 720,753 shares of Common Stock held by AO Partners Fund.

(b) Mr. Swenson has shared voting and dispositive power of the Common Stock beneficially owned by AO Partners Fund by virtue of such entity’s and person’s relationship to the other as described in Item 5(a).

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

With respect to AO Partners Fund, AO Partners is entitled to (1) an allocation of a portion of profits, if any, and (2) a management fee based upon a percentage of total capital.

Mr. Swenson is indemnified by AO Partners Fund and AO Partners for liabilities he may incur in connection with his duties for the AO Partners Group.

Other than the foregoing agreements and arrangements, and the Joint Filing Agreement, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 hereof and between such persons and any person with respect to any securities of the Issuer.

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CUSIP No. 74265M205

Item 7.

Material to be Filed as Exhibits.

Exhibit No.	Description

1	Joint Filing Agreement.*

2	Letter from Nick Swenson to the Board of Directors of the Company dated June 1, 2012.*

3	Notice of Intent to Nominate Directors from Nicholas Swenson to Secretary of the Company dated June 27, 2012.*

4	Letter from the Company to Nick Swenson dated June 15, 2012.*

5	Standby Purchase Agreement dated December 17, 2013.
_______________ *Previously filed

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CUSIP No. 74265M205

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: December 23, 2013

AO PARTNERS I, L.P.

By: AO PARTNERS, LLC

General Partner

By: /s/ Nicholas J. Swenson

Nicholas J. Swenson

Managing Member

AO PARTNERS, LLC

By: /s/ Nicholas J. Swenson

Nicholas J. Swenson

Managing Member

/s/ Nicholas J. Swenson

Nicholas J. Swenson

EX-5 2 cg307a.htm cg307a.htm

Exhibit 5

STANDBY PURCHASE AGREEMENT

This STANDBY PURCHASE AGREEMENT (this “Agreement”) is made and entered into on December 17, 2013, by and among AO Partners, LLC, a Minnesota limited liability company (together with its permitted designees pursuant to Section 14 below, “AOP”), Farnam Street Capital, Inc., a Minnesota corporation (together with its permitted designees pursuant to Section 14 below, “FSP” and, together with AOP, each a “Standby Purchaser” and collectively the “Standby Purchasers”), and Pro-Dex, Inc., a Colorado corporation (the “Company”).

RECITALS

WHEREAS, the Company proposes to distribute, at no charge, to each holder of record of shares of common stock, no par value per share, of the Company (the “Common Stock”), on a record date (the “Record Date”) to be set by the Board of Directors (“Board”) of the Company, non-transferable rights (the “Rights”) to subscribe for and purchase additional shares of Common Stock (the “Rights Offering”);

WHEREAS, the Company desires to raise a total of $3,000,000 in connection with the Rights Offering;

WHEREAS, in connection with the Rights Offering, the Company’s shareholders of record as of the Record Date will receive a specified fractional number of “Rights” for each share of Common Stock held as of the Record Date (i.e., for each one (1) share of Common Stock held as of the Record Date, the shareholder will receive less than one (1) Right, with the actual fraction to be set by the Board based on the total amount to be raised by the Company in the Rights Offering, the Subscription Price (as defined below) and the total number of shares of Common Stock to be offered in connection with the Rights Offering);

WHEREAS, each whole Right, if and when issued, will entitle the holder thereof to purchase one share of Common Stock (the “Subscription Privilege”) at a specified discount (which discount will be determined by the Board prior to the launch of the Rights Offering) of the market price of the Common Stock as reported by the NASDAQ Capital Market on the latest practicable date prior to the launch of the Rights Offering (the “Subscription Price”);

WHEREAS, in order to facilitate the Rights Offering, the Company has offered to the Standby Purchasers the opportunity, and the Standby Purchasers have severally (and not jointly) agreed and committed, to purchase at a price per share equal to the Subscription Price (the “Purchase Price”), subject to the terms and conditions of this Agreement (including limitations on the total number of shares of Common Stock that may be issued under this Agreement), any and all shares of Common Stock that are not subscribed for pursuant to the Subscription Privilege in the Rights Offering (such shares, the “Unsubscribed Shares”, and such offering, the “Standby Offering”).

AGREEMENT

NOW THEREFORE, in consideration of the foregoing and the mutual covenants herein contained and other good and valuable consideration, the parties hereto agree as follows:

Section 1. Standby Purchase Commitment.

(a) Standby Purchase Commitment. If and to the extent there remain Unsubscribed Shares after the closing of the Rights Offering, the Standby Purchasers hereby severally (and not jointly) agree to purchase from the Company at the Purchase Price all such Unsubscribed Shares, up to the full amount of shares of Common Stock offered by the Company in the Rights Offering, with each Standby Purchaser agreeing to purchase fifty percent (50%) of such Unsubscribed Shares (as to each Standby Purchaser, the “Commitment Amount”). Each Standby Purchaser (i) acknowledges that its precise Commitment Amount is yet to be determined based on the Company’s pending determination of a Rights Offering amount and pricing within the range specified in the Recitals to this Agreement, and (ii) affirms its agreement to its respective Commitment Amount provided that it is within such range. For purposes of clarity, unless otherwise agreed by each Standby Purchaser and the Company in writing, (x) each Standby Purchaser agrees to purchase fifty percent (50%) of the aggregate Common Stock purchased under this Agreement and (y) each Standby Purchaser’s aggregate Commitment Amount shall not exceed $1,500,000.

(b) Determination and Allocation of Unsubscribed Shares. Reasonably promptly following the expiration of the Rights Offering, the Board will determine the number of Unsubscribed Shares. Reasonably promptly after the Board’s determination of the number of Unsubscribed Shares and consideration of the factors described in Section 1(e), the Company will notify each Standby Purchaser in writing of the amount of Common Stock to be purchased by it under this Agreement (as to each Standby Purchaser, the “Allocated Amount”), which amount shall, subject to Section 1(e), equal the Standby Purchaser’s Commitment Amount. Each Standby Purchaser acknowledges that its Allocated Amount is subject to reduction in accordance with Section 1(e) below.

(c) Closing. On the basis of the representations and warranties and subject to the terms and conditions herein set forth, the closing of the purchase and sale of each Standby Purchaser’s Allocated Amount of Common Stock (the “Closing”) shall take place at the offices of the Company at 11:00 a.m., Pacific time, on the third business day following the closing of the Rights Offering, or such other place, time or date as may be determined by the parties hereto (the “Closing Date”). At the Closing, the Company shall deliver or cause to be delivered to each Standby Purchaser one or more certificates (or evidence of book-entry records) representing the shares of Common Stock issued to such Standby Purchaser in respect of such Standby Purchaser’s Allocated Amount, and such Standby Purchaser shall deliver (or cause to be delivered) to the Company, in cash or other immediately available funds, the aggregate Purchase Price relating to such shares of Common Stock.

(d) Withdrawal and Termination. At any time prior to the Closing, the Company may in its sole discretion withdraw or terminate the Rights Offering or the Standby Offering. In the event that the Company withdraws or terminates the Rights Offering or the Standby Offering, the Company will return each Standby Purchaser’s payment of the Purchase Price, or portion thereof, if any, to the Standby Purchaser, without interest or other income, promptly thereafter.

(e) Limitation on Allocated Amount. In the event that the purchase of all of the Unsubscribed Shares by the Standby Purchasers could, as determined by the Board in its sole discretion, potentially result in a limitation on the Company’s ability to use net operating losses, tax credits and other tax attributes (collectively, “Tax Attributes”) under the Internal Revenue Code of 1986, as amended, and rules promulgated by the Internal Revenue Service, the Company may, but is under no obligation to, reduce each Standby Purchaser’s Allocated Amount to such number of shares of Common Stock as the Board in its sole discretion shall determine to be advisable in order to preserve the Company’s ability to use the Tax Attributes.

Section 2. Representations and Warranties of each Standby Purchaser. Each Standby Purchaser severally (and not jointly) represents and warrants to the Company as follows:

(a) Existence and Good Standing; Authority. Such Standby Purchaser is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has all requisite power and authority to carry on its business as now conducted.

(b) Authorization of Agreement; Enforceability. This Agreement has been duly and validly authorized, executed and delivered by such Standby Purchaser. This Agreement is valid, binding and enforceable against such Standby Purchaser in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principals.

(c) Accredited Investor. Such Standby Purchaser is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

(d) Information; Knowledge of Business. Such Standby Purchaser (either alone or through its members and affiliates) is familiar with the business in which the Company is engaged. Such Standby Purchaser (either alone or through its members and affiliates) has knowledge and experience in financial and business matters, is familiar with investments of the type that it is undertaking to purchase under this Agreement, is fully aware of the risks involved in making an investment of this type, and is capable of evaluating the merits and risks of this investment. Such Standby Purchaser acknowledges that, prior to executing this Agreement, it (and each of its members, affiliates and representatives) has had the opportunity to ask questions of and receive answers or obtain additional information from the Company and its management concerning the financial and other affairs of the Company.

(e) Availability of Funds. Such Standby Purchaser has available sufficient funds to pay its full Commitment Amount.

(f) Investment Intent. Such Standby Purchaser is acquiring its shares of Common Stock under this Agreement for its own account, with the intention of holding such shares for investment and with no present intention of participating, directly or indirectly, in a distribution of such shares except pursuant to registration under, or an exemption from the registration requirements of, the Securities Act and applicable state securities laws.

(g) No Manipulation or Stabilization of Price. Such Standby Purchaser has not taken and will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise, stabilization or manipulation of the price of any security of the Company in order to facilitate the sale or resale of any securities of the Company, and such Standby Purchaser is not aware of any such action taken or to be taken by any person.

Section 3. Representations and Warranties of the Company. The Company represents and warrants to each Standby Purchaser as follows:

(a) Existence and Good Standing; Authority. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado and has all requisite corporate power and authority to carry on its business as now conducted.

(b) Authorization of Agreement; Enforceability. This Agreement has been duly and validly authorized, executed and delivered by the Company. This Agreement is valid, binding and enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principals.

(c) Due Authorization and Issuance of Shares. All of the shares of Common Stock to be issued pursuant to this Agreement will have been duly authorized for issuance prior to the Closing, and, when paid for, issued and distributed as set forth in this Agreement, will be validly issued, fully paid and non-assessable; and none of such shares of Common Stock will have been issued in violation of the preemptive rights of any security holders of the Company arising as a matter of law or under or pursuant to the Company’s Articles of Incorporation, as amended (“Articles of Incorporation”), the Company’s Bylaws, as amended (“Bylaws”), or any material agreement or instrument to which the Company is a party or by which it is bound.

(d) No Conflicts. The Company is not in violation of its Articles of Incorporation or Bylaws or in default under any agreement, indenture or instrument to which the Company is a party, the effect of which violation or default could reasonably be expected to have a material adverse effect on the Company’s execution, delivery and performance of this Agreement. The consummation of the transactions contemplated by this Agreement will not conflict with, constitute a breach of or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Company pursuant to, the terms of any agreement, indenture or instrument to which the Company is a party, which conflict, breach, default, lien, charge or encumbrance could reasonably be expected to have a material adverse effect on the Company’s execution, delivery and performance of this Agreement. Except as required by the Securities Act, the Exchange Act and applicable state securities laws, no consent, authorization or order of, or filing or registration with, any court or governmental agency is required for the Company’s execution, delivery and performance of this Agreement.

Section 4. Conditions to Closing.

(a) Conditions to Both Parties’ Obligations. The obligations of the Company and each respective Standby Purchaser to consummate the transactions contemplated hereunder in connection with the Standby Offering are subject to the fulfillment, prior to or on the Closing Date, of the following conditions:

(i) the Rights Offering shall have been consummated in accordance with the terms and conditions described in the prospectus to be filed by the Company with the Securities and Exchange Commission (the “Commission”) in connection with the Rights Offering (the “Prospectus”); and

(ii) no judgment, injunction, decree, regulatory proceeding or other legal restraint shall prohibit, or have the effect of rendering unachievable, the consummation of the Standby Offering or the transactions contemplated by this Agreement.

(b) Conditions to Company’s Obligations. The obligations of the Company to consummate the transactions contemplated hereunder in connection with the Standby Offering with respect to each Standby Purchaser are subject to the fulfillment (or waiver by the Company in writing), prior to or on the Closing Date, of the following conditions:

(i) the representations and warranties of such Standby Purchaser in Section 2 shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if made as of such date; and

(ii) such Standby Purchaser shall have performed all of its obligations hereunder.

(c) Conditions to each Standby Purchaser’s Obligations. The obligations of each respective Standby Purchaser to consummate the transactions contemplated hereunder in connection with the Standby Offering are subject to the fulfillment (or waiver by such Standby Purchaser in writing), prior to or on the Closing Date, of the following conditions:

(i) the representations and warranties of the Company in Section 3 shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if made as of such date; and

(ii) the Company shall have performed all of its obligations hereunder.

Section 5. Survival. The representations and warranties of the parties contained in this Agreement or in any certificate delivered hereunder shall survive the Closing hereunder.

Section 6. Covenants.

(a) SEC Filings. The Company agrees, as soon as reasonably practicable after the Company is advised or obtains knowledge thereof, to advise the Standby Purchaser with a confirmation in writing, of (i) the time when any amendment or supplement to the Prospectus has been filed, (ii) the issuance by the Commission of any stop order, or of the initiation or threatening of any proceeding, suspending the effectiveness of the Registration Statement relating to the Rights Offering (the “Registration Statement”) or any amendment thereto or any order preventing or suspending the use of any preliminary prospectus or the Prospectus or any amendment or supplement thereto, (iii) the issuance by any state securities commission of any notice of any proceedings for the suspension of the qualification of the shares of Common Stock issued in the Rights Offering for offering or sale in any jurisdiction or of the initiation, or the threatening, of any proceeding for such purpose, (iv) the receipt of any comments from the Commission directed toward the Registration Statement or any document incorporated therein by reference, and (v) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information. The Company shall use its commercially reasonable efforts to prevent the issuance of any such order or the imposition of any such suspension and, if any such order is issued or suspension is imposed, to obtain the withdrawal thereof as promptly as possible.

(b) Information About Standby Purchaser. Each Standby Purchaser agrees to furnish to the Company all information with respect to such Standby Purchaser that may be necessary or appropriate and will cause any information furnished to the Company for the Prospectus by such Standby Purchaser not contain any untrue statement of material fact or omit to state a material fact required to be stated in the Prospectus or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(c) Public Announcements. Neither the Company nor any Standby Purchaser shall issue any public announcement, statement or other disclosure with respect to this Agreement or the transactions contemplated hereby without the prior consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed, except if such public announcement, statement or other disclosure is required by applicable law or applicable stock market regulations, in which case the disclosing party shall consult in advance with respect to such disclosure with the other parties to the extent reasonably practicable.

(d) NASDAQ Listing. The Company shall use commercially reasonable efforts to cause the shares of Common Stock issued to each Standby Purchaser hereunder to be listed on the NASDAQ Capital Market.

Section 7. Termination.

(a) By Standby Purchaser. Each respective Standby Purchaser may terminate this Agreement (i) upon the occurrence of a suspension of trading in the Common Stock by the NASDAQ Capital Market, any suspension of payments with respect to banks in the United States or a declaration of war or national emergency in the United States, or (ii) if the Company materially breaches its obligations under this Agreement and such breach is not cured within five business days following written notice to the Company.

(b) By Company. The Company may terminate this Agreement (i) in the event the Company, in its reasonable judgment, determines that it is not in the best interests of the Company and its shareholders to proceed with the Rights Offering and/or the Standby Offering, (ii) if consummation of the Rights Offering and/or the Standby Offering is prohibited by applicable law, rules or regulations, or (iii) as to any particular Standby Purchaser, if such Standby Purchaser materially breaches its obligations under this Agreement and such breach is not cured within five business days following written notice to the Standby Purchaser.

(c) Other. Any of the parties hereto may terminate this Agreement if the transactions contemplated hereby are not consummated by March 31, 2014 through no fault of the terminating party. In addition, this Agreement shall terminate upon the parties’ mutual consent.

(d) Effect of Termination. The Company and the Standby Purchaser hereby agree that any termination of this Agreement pursuant to this Section 7 (other than termination by one party in the event of a breach of this Agreement by the other party or a misrepresentation of any of the statements made hereby by the other party), shall be without liability to the Company or the Standby Purchasers.

Section 8. Notices. All notices, communications and deliveries required or permitted by this Agreement shall be made in writing signed by the party making the same, shall specify the Section of this Agreement pursuant to which it is given or being made and shall be deemed given or made (a) on the date delivered if delivered in person, (b) on the third (3rd) business day after it is mailed if mailed by registered or certified mail (return receipt requested) (with postage and other fees prepaid) or (c) on the day after it is delivered, prepaid, to an overnight express delivery service that confirms to the sender delivery on such day, as follows:

If to the Company:

Pro-Dex, Inc.

2361 McGaw Avenue

Irvine, California 92614

Attention: Chief Executive Officer

Fax: (866) 851-9339

With a copy (which shall not constitute notice to the Company) to:

Rutan & Tucker, LLP

611 Anton Boulevard

14th Floor

Costa Mesa, California 92626

Attention: Garett Sleichter

Fax: (714) 546-9035

If to a Standby Purchaser, as provided on the signature page hereto.

or to such other representative or at such other address of a party as such party hereto may furnish to the other parties in writing in accordance with this Section 8.

Section 9. Entire Agreement. This Agreement constitutes the entire agreement and understanding between Standby Purchasers and the Company, and supersedes all prior agreements and understandings relating to the subject matter hereof.

Section 10. Indemnification. To the fullest extent permitted by law, each Standby Purchaser hereby agrees (severally, and not jointly) to indemnify and hold harmless the Company, its affiliates, and their respective directors, officers and authorized agents from and against any and all losses, claims, damages, expenses and liabilities relating to or arising out of any breach of any representation, warranty, covenant or undertaking made by or on behalf of such Standby Purchaser in this Agreement.

Section 11. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Colorado.

Section 12. Amendments. This Agreement may be modified or amended only with the written consent of the Company and all of the Standby Purchasers.

Section 13. Severability. If any provision of this Agreement shall be invalid under the applicable law of any jurisdiction, the remainder of this Agreement shall not be affected thereby.

Section 14. Permitted Designees. Each Standby Purchaser may designate to one or more of its affiliates the right to purchase all or a portion of the Common Stock purchasable by such Standby Purchaser hereunder; provided that each such designee is an “accredited investor” (as that term is defined in Regulation D promulgated under the Securities Act) and satisfies such other investor suitability requirements as may be determined by the Board in its discretion. All references in this Agreement to a “Standby Purchaser” shall mean such Standby Purchaser and each permitted designee of such Standby Purchaser.

Section 15. Miscellaneous.

(a) Except for permitted designees pursuant to Section 14, no person other than the Company or the Standby Purchaser shall be entitled to rely on and/or have the benefit of, as a third party beneficiary or under any other theory, any of the representations, warranties, agreements, covenants or other provisions of this Agreement.

(b) The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning of this Agreement.

(c) This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which, when taken together, shall constitute one and the same instrument.

(d) Except for permitted designees pursuant to Section 14, no Standby Purchaser may assign this Agreement or any of its rights hereunder without the Company’s prior written consent.

(e) Each party to this Agreement shall pay his, her or its own costs, taxes, fees and expenses (including attorney fees) incurred in connection with the Rights Offering, the Standby Offering and the other transactions contemplated by this Agreement.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the Standby Purchaser has executed this Agreement on and as of the date first set forth above.

STANDBY PURCHASER:	STANDBY PURCHASER:
AO PARTNERS, LLC	FARNAM STREET CAPITAL, INC.


By:	/s/ Nick Swenson	By:	/s/ Ray Cabillot
Name:	Nick Swenson	Name:	Ray Cabillot
Title:	Managing Member	Title:	CEO

Address for Notices:	Address for Notices:
3033 Excelsior Blvd.	3033 Excelsior Blvd.
Suite 560	Suite 320
Minneapolis, MN 55416	Minneapolis, MN 55416

ACCEPTED AND AGREED:
PRO-DEX, INC.

By:	/s/ Harold A. Hurwitz
	Harold A. Hurwitz
	Chief Executive Officer